Wednesday, March 21, 2012
Rather than focus on helping smaller businesses, Republicans and Democrats in Washington have come together on legislation that would assist large corporations and allow them to skirt financial disclosure rules.
The Jump-Start Our Business Start-Ups Act (or JOBS Act) started out as a plan to make it easier for start-up companies to raise capital. Now, though, the JOBS Act will benefit “emerging growth” companies that earn up to $1 billion a year.
Kathleen Smith, chairwoman of Renaissance Capital, which deals with initial public offerings, told the Senate Banking Committee: “By this definition, we would be giving relief to over 90 percent of the companies going public,” including “companies with very large market capitalizations.”
The bill also would permit companies to hide certain information that investors seek in a prospectus, such as audited financial data going back more than two years.
In an editorial, Bloomberg wrote that “the JOBS Act goes too far. It would gut many of the investor protections established just a decade ago in the 2002 Sarbanes-Oxley law,” which was created in the wake of the Enron and WorldCom accounting scandals.
The bill swept through the House of Representatives 390-23 and is now being debated in the Senate.
-Noel Brinkerhoff
To Learn More:
In Latest Jobs Bill, a Billion-Dollar Business Is Now Small (by Robb Mandelbaum, New York Times)
Small Biz Jobs Act Is a Bipartisan Bridge Too Far (editorial, Bloomberg)
Which Lobby Wrote the "JOBS" ("Jivers' Opportunity to Bilk Suckers") Act? Solving a "Bipartisan" Mystery (by Richard Eskow, Huffington Post)
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